Israeli Government Approves State Budget for Next Two Years

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The Knesset in Jerusalem, May 2016.
The Knesset in Jerusalem, May 2016.Credit: Emil Salman

The government unanimously approved the new state budget for 2017-2018 and the accompanying Economic Arrangements Law following a marathon meeting that lasted, with breaks, 21 hours.

The 2017 budget will be 454.1 billion shekels, and the 2018 budget 463.6 billion shekels.

The state budget and the Economic Arrangements Law will now be transferred to the Justice Ministry for legislation. They will both be brought to the Knesset for a vote toward the end of October, when the legislature begins its winter session. The two laws are meant to be approved in three readings by the end of December.

Among other things, one controversial clause was also passed: Starting January 1, those in possession of three apartments or more will need to pay a new tax – the multiple property tax amounting to 1 percent of the apartment's worth.

During the negotiations between top treasury officials and the heads of different ministries, which took place simultaneously in different rooms at the Prime Minister's Office, the treasury officials showed unprecedented generosity and agreed to add extras to the budgets of a string of ministries, amounting to some 2 billion shekels in each of the two upcoming years. It's not yet clear how the treasury is planning to fund these additions.

The Social Equality Ministry's budget will grow by 650 million shekels over the next two years, the Culture and Sports Ministry budget will grow by 455 million shekels in the next two years, and the Science, Technology and Space Ministry's budget by some 200 million. The Social Affairs Ministry's budget will rise by 400 million shekels in 2017 and another 918 million shekels in 2018. These additions will be added the budget's base.

The National Infrastructure, Energy and Water Ministry's budget will grow by 140 million shekels in each of the two next years, and it was agreed that it will receive a further 360 million shekels to improve and deploy the natural gas infrastructure.

Following the agreements, National Infrastructure, Energy and Water Minister Yuval Steinitz said that "this agreement is a turning point for the natural gas revolution. The budget will allow the Energy Ministry to bring the market to a place of cleaner and cheaper energy and more economical for the consumer market."

Other ministries also received added funds, but their amounts have yet to be published.

Prime Minister Benjamin Netanyahu lauded the budget at the start of the deliberations, saying tax cuts and plans to trim regulations would lead to growth and investment. “The state budget for 2017-18 will encourage growth, increase competition and lower the cost of living,” he said.

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